Source: China National Building Materials Company Limited

Date: August 20, 2012

On August 13, China National Building Material Company Limited (CNBM) made its debut on the third session of theFortune"Most Innovative Chinese Companies", ranked fourth among 25 enterprises listed and 1st among building materials enterprises listed.

The event was jointly initiated byFortuneand Pan-Pacific Management Institute. On the basis of a preliminary selection of financial indicators of China's top 500 enterprises in 25 industries over the past three years, the expert panel conducted evaluation from five dimensions including innovation atmosphere, technical innovation, management innovation, product and marketing innovation and competitiveness innovation, and finalized the list of the 25 most innovative Chinese companies in 2012. A total of 16 out of the companies listed made their debut on the list. "Only nine companies listed last year held their positions; such dramatic changes show innovation needs continuous input and attention, and any enterprise that slacks off a bit will be overtaken by their rivals," the evaluating committee said.

For CNBM, making the list is great acknowledgement of its innovation ability and achievements. The award is particularly significant amid the market slump. Since its establishment in 2005, CNBM started from scratch, spent one year going public in Hong Kong, made innovation and grew constantly, and now creates a new growth mode and management mode, thereby boosting its overall competitiveness and profitability, expanding rapidly, enormously enhancing its business indicators for consecutive years, and becoming a domestic leading building materials enterprise in complex and fierce competition. Over the past seven years, the compound growth rates of the revenues and net profit of CNBM have come to 60 percent and 70 percent respectively. CNBM ranked 58th among 2012 China's Top 500 Enterprises unveiled byFortuneand 1st among building materials enterprises listed.

CNBM's successful innovation is attributable to unique challenges. Facing predicaments of the building materials industry, such as over capacity, enterprise decentralization, cut-throat competition and low industrial benefit, CNBM has followed the development law of the industry. To date, CNBM has reorganized some 500 cement enterprises, formed a complete cement business layout and increased its annual output from 11 million tonnes to 300 million tonnes, ranking first in the world. The joint reorganization promoted by CNBM has also boosted industrial concentration. In 2011, the concentration ratio of the top ten cement enterprises nearly doubled to 26.5 percent from 15.3 percent in 2005. In 2011, China's cement industry saw a record year-on-year total profit growth of 67 percent, and 70 percent of the profit was contributed by the markets dominated by CNBM.

CNBM's unique development mode and growth path in the context of full competition and over capacity has yielded substantial economic benefit for CNBM and created a new idea for the healthy development of the industry. A series of new concepts implemented innovatively by CNBM, including "reorganization", "market-oriented operation of central SOEs", "integrated, modularized, process, institutionalized and digitalized development", "tutorship" and "price-cost-profit", have drawn close attention from some institutions of higher education as well as distinguished experts and scholars, and were included as study cases of Harvard Business School in 2011.